Realist, not conformist analysis of the latest financial, business and political news

To Spot What Is Really Going On At GM

Well, yes, this is a nice threat.

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] White House economic adviser Larry Kudlow said on Monday the administration is looking to end certain subsidies, including some to automakers, after President Trump threatened to cut federal payments to General Motors. Kudlow said that while the president cannot legally eliminate subsidies given solely to GM, the administration is looking to end subsidies for electric vehicles in the near future, potentially by 2021, as reported by Reuters. [/perfectpullquote]

It’s also not all about GM, as our US auto correspondent, Spike, tells us:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Regarding Trump’s threat to cancel subsidies to GM for vowing to lay off
15% of its workforce, an American radio news network full of
NeverTrumpers noted that the subsidy is an inducement paid directly to
the car-buyer, “so I don’t know how that would work….” In fact, it wouldn’t work; a cancellation of benefits for a single
beneficiary is essentially an unconstitutional Bill of Attainder. But,
as the accompanying article notes, subsidies for buying an electric car
are written to phase out, once each manufacturer sells a given number of
units. Tesla is already being hit, and GM is reaching the limit. One reason for the layoff is that GM is ceasing production of, among
other things, the Chevy Volt. Meaning that, without inducement from
Uncle Sugar, consumers have no reason to buy it. There are surely other subsidies that automakers receive, as well as
targeted favors in the tax code. But Kudlow and his staff must be in
rapture that Trump, even if driven merely by personal annoyance, has put
himself firmly on the side of killing some program. [/perfectpullquote]
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